B-160704, FEB. 16, 1967

B-160704: Feb 16, 1967

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WHICH REMAIN THE PROPERTY OF THE GOVERNMENT AND ARE NOT INCLUDED IN THE TOTAL WEIGHT. 7. THE MARKET APPRAISAL VALUE FOR THIS ITEM WAS ESTABLISHED PRIOR TO BID OPENING AT $0.17 PER POUND. IT IS FURTHER REPORTED THAT A REVIEW OF THE APPRAISAL CONDUCTED THEREAFTER. INDICATED AT $0.147 PER POUND WAS A MORE REASONABLE APPRAISAL OF THE VALUE OF ITEM 22. IN THAT IT WAS BASED ON THE VALUE OF CLEAN BRASS. ORDINARILY A WIDE RANGE OF BID PRICES IN SURPLUS SALES IS NOT DEEMED TO BE CONSTRUCTIVE NOTICE OF ERROR BECAUSE OF THE MANY POSSIBLE USES TO WHICH THE SURPLUS ITEMS MAY BE PUT. WIDE PRICE VARIATIONS ARE GENERALLY NOT ENCOUNTERED IN THE SALE OF SCRAP METALS BECAUSE OF THE LIMITED USES TO WHICH IT MAY BE PUT.

B-160704, FEB. 16, 1967

TO THE DIRECTOR, DEFENSE SUPPLY AGENCY:

WE REFER TO A LETTER DATED JANUARY 17, 1967, WITH ENCLOSURES, (YOUR REFERENCE DSAH-G) FROM THE ASSISTANT COUNSEL, SUBMITTING FOR OUR CONSIDERATION THE REQUEST OF MR. GEORGE SHAPIRO, 8834 BLUE GRASS ROAD, PHILADELPHIA, PENNSYLVANIA, TO RESCIND THE AWARD MADE TO HIM OF ITEM 22 (CONTRACT NO. 11-6140-078, DATED MAY 31, 1966), OR, IN THE ALTERNATIVE, ALLOW A REDUCTION IN THE CONTRACT PRICE FROM $0.247 PER POUND TO $0.147 PER POUND FOR 7,500 POUNDS OF SCRAP.

SALES INVITATION FOR BIDS NO. 11-6140, ISSUED BY THE DEFENSE SURPLUS SALES OFFICE, PHILADELPHIA, PENNSYLVANIA, DESCRIBED ITEM 22 AS FOLLOWS:

"BRASS BEARINGS, SCRAP: WITH ATTACHMENTS CONSISTING OF STEEL ROLLERS AND PINS. LOOSE AND IN WOODEN BOXES, WHICH REMAIN THE PROPERTY OF THE GOVERNMENT AND ARE NOT INCLUDED IN THE TOTAL WEIGHT.

7,500 LBS.'

THE FIVE BIDS FOR THE ITEM IN QUESTION RANGED FROM A LOW OF $0.06098 PER POUND, TO A SECOND HIGH BID OF $0.1349 PER POUND, TO THE HIGH BID OF $0.247 PER POUND SUBMITTED BY MR. SHAPIRO. THE MARKET APPRAISAL VALUE FOR THIS ITEM WAS ESTABLISHED PRIOR TO BID OPENING AT $0.17 PER POUND. IT IS FURTHER REPORTED THAT A REVIEW OF THE APPRAISAL CONDUCTED THEREAFTER, BUT BEFORE AWARD, INDICATED AT $0.147 PER POUND WAS A MORE REASONABLE APPRAISAL OF THE VALUE OF ITEM 22.

IN A LETTER DATED JUNE 7, 1966, MR. SHAPIRO ASSERTED THAT HE HAD ERRONEOUSLY COMPUTED HIS BID, IN THAT IT WAS BASED ON THE VALUE OF CLEAN BRASS, RATHER THAN ON BRASS TAINTED WITH IRON ATTACHMENTS AS DESCRIBED IN ITEM 22. IN SUPPORT OF HIS REQUEST FOR RECISSION OR PRICE REFORMATION MR. SHAPIRO SUBMITTED HIS WORK SHEET THAT ALLEGEDLY EVIDENCED THE ERROR.

ORDINARILY A WIDE RANGE OF BID PRICES IN SURPLUS SALES IS NOT DEEMED TO BE CONSTRUCTIVE NOTICE OF ERROR BECAUSE OF THE MANY POSSIBLE USES TO WHICH THE SURPLUS ITEMS MAY BE PUT. B-147427, NOVEMBER 6, 1961; B-149302, JULY 13, 1962. CONVERSELY, WIDE PRICE VARIATIONS ARE GENERALLY NOT ENCOUNTERED IN THE SALE OF SCRAP METALS BECAUSE OF THE LIMITED USES TO WHICH IT MAY BE PUT. SEE B-158334, JANUARY 21, 1966; AND B-149660, SEPTEMBER 21, 1962, WHERE IT WAS STATED THAT IN SCRAP METAL SALES VARIATIONS IN BID PRICES ARE GENERALLY LESS THAN A CENT OR A CENT AND ONE-HALF PER POUND.

THE DIFFERENCE BETWEEN THE SECOND HIGH BID AND THE HIGHEST BID WAS $0.1121 AND THE DIFFERENCE BETWEEN SUCH HIGH BID AND THE CORRECTED MARKET APPRAISAL WAS $0.10.

IN THE CIRCUMSTANCES, IT APPEARS THAT A BONA FIDE ERROR WAS MADE AS ALLEGED AND THAT THE CONTRACTING OFFICER WAS ON A CONSTRUCTIVE NOTICE OF A POSSIBLE MISTAKE IN BID WHICH SHOULD HAVE BEEN VERIFIED PRIOR TO AWARD. ACCORDINGLY, THE CONTRACT WITH MR. GEORGE SHAPIRO FOR ITEM 22 SHOULD BE CANCELLED AS ADMINISTRATIVELY RECOMMENDED.